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Get out of Debt, August edition

3K views 45 replies 19 participants last post by  Zamber 
#1 ·
Uh oh, summer is almost half done and I see fall looming, Lets make this the month we get our finances in order. If you want to pay off your credit cards, start savings or get budget help, this is the thread for you. Most of us use Dave Ramsey's method but please join us even if you're following someone else/your own plan. All welcome!

Here's DR's plan:

These are the Baby Steps:

Pre-Step 1: Get current on your debts and do a budget
0.1 Commit to NEVER borrow $$$ again
0.2 Talk with spouse and get him/her on the same page as you concerning finances.
0.3 Do a written budget
0.4 Temporarily stop all retirement contributions
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing)
0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months
0.7 Cut lifestyle (Cut CATV, Cellphone, Regular phone "extra's", Internet, Eating out, etc) and/or take second job if $1000 EF will take more than 30-90 days.
0.8 Get current on ALL bills

BS1 $1,000 to start an Emergency Fund
1.1 Chop up/freeze CC's (You have an EF now)
1.2 Get Health insurance NOW if in the US (chances of getting sick w/ major medical bills are larger than that of death)
1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died.
1.4 Amputate cars that you can't pay off within 24 months
1.5 Consider raising insurance deductables to $500 or $1000

BS2 Pay off all debt using the Debt Snowball
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.
2.1 You can take your first vacation since finding Dave if you can pay cash for it (no using the EF !!!)

BS3 Three to six months of expenses in savings
3.1 Start car replacement fund
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.
3.3 Start furniture or other non-essential stuff replacement fund

BS4 Invest 15 percent of household income for retirement

BS5 College funding for children

BS6 Pay off home early

BS7 Build wealth and give! Invest in mutual funds and real estate

Here's the link to Dave Ramsey's website:

www.daveramsey.com

Please join us!
 
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#2 ·
If you need added or removed from the list, or I got your details wrong just let me know and I'll fix it.

Pre-Step 1
anstar
BelovedK
BonnieNova
chanibell
dfunk98
Gray's_Mommy
kittywitty
lactivistmama
luckybamboo
madsommer
Miasmamma
papayapetunia
punkrawkmomma27
Stephenie
waldorfknitmama

BS#1: Save up $1000
2lilsweetfoxes
annettemarie
Contrariety
CookiePie
crunchymomof2
dex_millie
Evenstar
fairydust020409
greenmom4
JamieB
JenniferH
JustKiya
Kaitnbugsmom
Krisis
Ksenia
lj2blessed
mamabain
mommaknowsbest
neveryoumindthere
NWmt_Mama
prana
Sihaya
teenyToona
Tryingforbaby
vmommy

BS#2: Pay off all Debt (except the mortgage)
100%Mom
2Rubies
AAK
AFwife
AllieFaye
astar326
Belia
Bluegoat
canuckgal
claddaghmom
Cody'smomma
ColoradoMama
Contrariety
cparkly
cymbeline
dagny.galt
Deir
dkenagy
eirual
excitedtobeamom
FeelingBlessed
FiveLittleMonkeys
goldfishkate
HappyMommy2
Hedgehog_Mtn
herwitsend
hollytheteacher
indie
jeliphish
jjawm
kat.c.stevens
kavita
Keeta
killick
kings5queens4
KnittingKara
ktg
lalaland42
lakeruby
laohaire
Leav97
leigh2006
LittleBirdy
lizziebits
Livi's_Mama
llamalluv
LZP
major_mama11
mamabain
MamaPam
MamatoWill
mamimapster
mich
mrstice
MyTwoAs
my2girlz
Nickarolaberry
okapi
onlygirls
onthemove
Pernillep
PluggingAway
proudmamanow
Resque
RisingSun
RoadWorkAhead
samandhenrysmom
scrandall1173
Shellie
shllywlly
smallmama
stanleymama
stellarae
sweetjasmine
thenaturefreak
Tradd
tricia80
triscuitsmom
tynme
twin_mama
whiddle
wife&mommy
willew

BS#3: Build up to 3-6 months of savings
akichan
annethcz
beansmama
corrie43
Crunchy*VT*Mom
Denvergirlie
HappyHelpmate
MomtoWilmo
mammamo
maryjane
MCsMom
Nora_SEA
phatui5
phillytwinmama
p1gg1e
PPK
Rev1053
rionnhannah
sarafi
sparkprincess
Stone_Fence
yasinsmama

BS#4
mtm

BS#5
Maluhia

BS#6
kanga1622
rebeccalynn
Sarah8Jane
Softmama
 
#4 ·
Hey, I'm not officially signed in to this thread, but can I ask a question?
I read TMM, but it's back at the library now.

What does DR say you should do with existing RRSPs and RESPs? We have some money in a registered retirement fund, some in a registered education fund, and a little in a savings account saving to make an annual contribution to the education fund. Given that we have debt, ought we to clear those out & use them on the debt? Or leave them be - particularly the registered ones (not sure if this is something that applies in the USA, I am talking about plans that are registered through the government with certain tax benefits and so on)?

We were thinking of leaving the $5000 RRSP but calling it our emergency fund, thereby breaking it (and if you break it you pay tax on it as income) if needed for an emergency; leaving alone the existing RESP, and emptying the saving-for-RESP account towards debt. I really don't know if that makes sense though.

Any Canadians on this thread to share the differences of the Canadian banking & government stuff?
 
#5 ·
July Progress Update

Original Goal for 7/31 was 32% paid off
Actual Figure is 33.1% paid off

This month is commission month for my husband so we'll see a big jump again. However we're not really sure how much he'll be receiving. The company just closed their fiscal year on 7/31 so there is an extra bonus in there, they had a special on a specific product that he sold so that is another extra bonus, and they reached 120% of goal so he achieved a higher payout. Most of the money should come on the 8/20 paycheck but some of it may come in September. So setting the goal for this month is going to be a bit more difficult. I'm not complaining, though, this is a good problem to have.

So by 9/1 we should have paid off from between 37% and 50% of our BS2 debt. We're definitely killing one more CC with the 8/4 paycheck and then depending on the actual commission/bonus check we could kill two more accounts!

Congrats Eileen and Holly for the great July payoffs and snowballs!

Welcome Lima - I'm not familiar with the Canadian system but DR doesn't recommend cashing out any tax-generating retirement accounts in the United States unless it will prevent foreclosure or bankruptcy. If cashing in an account generates taxes and penalties then he says to leave it be and stop contributing until your debt is paid off and you have your 3-6 month EF. HTH.
 
#6 ·
Thanks, MyTwoAs. That does help - while I might not follow him to the letter, what you say does apply (not to cash out something that will generate tax). Ho hum, I guess that means we need to do a little more emergency fund building before debt tackling!
 
#7 ·
I have fallen off the wagon a few times this last mnth.. but the good news is I got a pretty nice sized raise and should be making some progress in September!! August I have a gazillion bills do
so it should be a rough month..
 
#8 ·
I can't belive it's already August!
I have had a major setback this week, but in the long run I hope it will work out for the better. My mom decided to buy a new Subaru and was going to trade her old one ('03 Forrester) in at the dealership. After some deliberation, I've decided to have her trade in my 2-door Acura so that I can have her Forrester. I've been thinking that I needed to budget for a 4-door vehicle, as DP and I hope to have a baby in a the next year or two, but I wasn't exactly ready and I don't have the $1300 I will owe my mom saved up yet. She is being flexible with payments, though, so I don't have to take it out of my EF! Which is very good!

So, looks like I won't be paying down on my SL debt ($8K) until I pay her off, but I hope this will mean I won't have to worry about a new car for many more years...

Looking forward to fall. Onward and Upward!
 
#9 ·
Still chugging along on Step 2. I apologize in advance for the following vent:

BS1- done

BS2- Car loan $9500 remaining. Plus however much DH puts on his cc each month.
Somewhere around $1000 on his card most of the time; if I help him pay it off, he runs it back up, so I finally told him he's on his own (and no, he won't cancel it)...

BS3- 3 mos saved now.
I don't totally follow DR- I didn't feel comfortable throwing extra on debt until we had this amt saved (in my acct, where DH can't spend it).

One step forward, two steps back, it seems like, since DH is really not on board at all.
I am making a little progress lately, thank goodness, but only because I'm working more hours than I would like, mostly nights, and am completely exhausted as a result. Definitely NOT a sustainable situation, and I don't intend to work this many hours for more than the next few months.

I had a lot more typed out, but really I think this sums it all up quite nicely:


ETA: We're actually doing OK financially, and DH is really a great guy. We're doing much better than we were a few years ago, and it's not like he's totally out of control or anything. He wants to pay off debt too, I'm just more of a tightwad about it than he is. I'm just cranky due to working rotating shifts. The rotating shifts thing only lasts for 3 more weeks, then I will be in my new PT position, no more screwing up my body clock by going back and forth. Hopefully at that point, I will have a better perspective on things.
 
#10 ·
Hi all, still on BS2 and trying to stay on track by keeping up with this thread!

major mama---good for you for making so much progress, even without dh on board! That is very impressive! I understand where you're coming from in terms of wanting the 3 month cushion, and I can see how reassuring that would be. In fact I kind of wish I had that right now, as I have a possible job opportunity looming at a lower salary and it would help if we had a cushion!

lakeruby--even if it's a setback, it sounds like you got a great deal on something that will really work for you.

MyTwoAs--that sounds like great progress--I really like your goal setting!

Limabean, I'm Cdn. too and we are not touching those particular items for fear of taking a tax hit. But we are not currently contributing either.

I've had lots of good suggestions on another thread I posted asking for budget critiques. And we are back to religiously tracking spending after falling off the wagon for part of June & July. I am now working on getting our food budget under control & am implementing a major pantry challenge.
 
#11 ·
We are still here. And still on step 3 it seems. DH and I have been talking about this a bit. We both feel like we are not really 'moving forward' and we are not 100% sure what to do about it.

One of the big things is that, well, big things jut keep coming up. You know, we finally save an extra X amount, and then bam, we MUCH replace the Y and guess how much it costs? Yep, X amount. I am truly thankful that we have X, and I guess in one respect that is what we are saving for . . . but on the other hand . . . well, sometimes I just really really want to be able to buy something without worring about the price.
 
#12 ·
Can I please join you? I need somewhere I can celebrate our successes and get support during our struggles.

We are on BS2

A year ago we owed
11k car loan
20 k LOC
1.5k CC1
9k CC2
Total 40.5k

Scary. I earn 45k a year and he earned 15k, but that was before he moved to Canada. Here is working part time and going to school in September so will be lucky to hit 10k this year. Its also been an expensive year as we got married, had an immigration application, he moved here (and imported his car - big expense), and we moved to an apartment.

We started our budget in March. We have a savings fund for his school and save 400 a month for it, so it will always be paid for in cash ahead of time and won't result in any debt.

On April Fools day, one month after we started, we paid off my car with my tax return after months of putting extra on it whenever we could.

Last month we paid off the smallest CC.

Now we are working on CC2. Its down to 8k, and we are estimating it will be paid off next April. Then we can get going on the LOC.

Its hard to be motivated because our incomes are so low in comparison to our expenses. Our rent is 900 a month and its for a dumpy small apartment in a bad building. It was the cheapest place we could find, and its more than 30% of our take home pay. I bring home 2100 a month and he brings home 800, which hopefully won't drop below 600 when he's in school fulltime.

We've cut everything. We didn't have internet for months but I couldn't deal. I do everything online and don't know how to pay bills or anything without it. Plus it was our only entertainment since we don't have cable, can't rent movies, can't buy books and I've read pretty much everything of interest to me at the library. So its back, on a cheap plan. We really need to increase our food budget, which is 50 a week. We are feeling it and aren't able to eat enough variety to be healthy.

I am so worried about our income as of next month when he is in school. I really don't want to slow the debt repayment or we will never make it!
 
#13 ·
Uh oh, I think I bumped myself back to BS#2 by buying a car last week.

Move me back if necessary!

Can anyone tell me what DR's advice is on that since I'm not a huge follower...how does this get prioritized now in my accumulation of a big EF of 6 months savings?

Also just bumping the thread because I need to stay on track with everything else! I did July books and came out pretty well, work was good and spending wasn't too high..groceries got careless and a huge car repair on old car shot things up a bit.
 
#14 ·
Hi guys! I have never participated in this thread but I figure I should jump in
We aren't really following Dave Ramsey because we NEED to get debt paid off before having an EF for multiple reasons. Main one being we can barely pay our bills right now. Anyway, we are expecting DH's bonus in a week or 2 and should be able to pay off about 3700 dollars worth of debt!! I can't wait. Is it ok if I am here even if we aren't doing DR?
 
#15 ·
PPK - DR would say that if you have debt you take your emergency fund down to $1,000, throw the extra at the debt, stop adding to the EF and pay off the debt. Once the debt is paid off you begin rebuilding your 3-6 month EF. Of course if there are "clouds on the horizon" - i.e. a pending layoff, an upcoming birth, etc then BS2 gets put on hold and you save as much money as you can until that storm passes.

Chely - Welcome! Not everyone here follows DR, some follow him loosely, and some follow his program to a T. I don't follow him 100% but I find a lot of support and inspiration in this thread.

dealic - Yay on cash-flowing school and paying off so much of your debt, that is great! You are in a better position now than you would have been with all of that paid off debt still over your head.
 
#17 ·
Thanks MyTwoAs! I know we are in a much better spot now than we were. We couldn't afford our basic payments when we first started. My 500 a month car payment made our budget impossible. Luckily we were able to use my tax return to pay it off and roll its payment onto the smallest card. Technically we should have paid off the smallest card with the return, and then finished off the car, but that put us so close to the edge that it scared me. Plus both were smaller amounts and we knew we could get rid of both by now (5 months in) so we switched them.

I just want to get more and more paid off every month that I worry about slowing it down. We made extra last month and were able to put an extra 500 on the second card to jumpstart paying it off though so that's exciting. I want it gone before next May because then we can start hardcore on my LOC during his 4 month co-op. That 4 months will make such a big dent in it and I don't want to "waste" any of the money paying off the card.
 
#18 ·
Please do join in dealic. Sounds like you are off to a good start since you already have a budget and have started saving for school. Your debt repayment has been good too. Is there any way your dh can work while he's going to school? Can he pull in a couple evening or weekend shifts?

PPK, DR would say put the car at the top of the debt repayment instead of adding to your ffef. I would likely say get your ef to a place your comfortable with and then go like crazy on the car.

welcome chely7425! Most of us follow some weird hybrid of DR so jump in. If at all possible, I'd recommend putting even 500 of that 3700 into an emergency fund b/c the number one idea behind DR is no new debt/break the cycle of relying on debt to get by. Let us know when you throw the money at your debt, we love to celebrate victories.
 
#19 ·
Thanks! He is planning on working while in school. Its just not a guaruntee that his current job will give him weekend hours. Currently he does receiving and they have trucks arrive Monday to Friday mornings, so that's when they need him. He won't know his schedule for 3 weeks, and they set the schedule several weeks ahead so he has told them only weekends for now, but that he will add availablility once he knows. So here's hoping!
 
#20 ·
Quote:

Originally Posted by mtm View Post

welcome chely7425! Most of us follow some weird hybrid of DR so jump in. If at all possible, I'd recommend putting even 500 of that 3700 into an emergency fund b/c the number one idea behind DR is no new debt/break the cycle of relying on debt to get by. Let us know when you throw the money at your debt, we love to celebrate victories.
His bonus should be about 4500 total... with 3700 going to debt
We need to get some baby stuff and a few things for the boys and the house but hopefully at least a little will go to savings! It is all stuff we need so I figure we should get it while we have the cash. DH is deploying soon and hopefully getting promoted so we SHOULD have a huge chuink of debt paid off in the next year!
 
#21 ·
Hello! I'd love to join, if that's okay! We are on Baby Step 2 - we took a couple of trips this month that we are paying for, and some grass fed beef, but next month we are focusing all of our energy on that darn student loan! We owe $15000 on it, hoping to have it paid by the beginning of next summer.

I am trying to think of every way to save even more money and put it toward student loan. I'm hoping to do this by dining in instead of dining out, more careful menu planning - so we're not throwing food away!, and using coupons. Just yesterday I scored four large packages of wipe for $6 at Rite Aid, and found free range chicken breasts for $1.19/lb (so cheap in our area).

What are some radical ideas that you guys have implemented to save moolah! I want this thing gone NOW!
 
#22 ·
Quote:

Originally Posted by imamomx2 View Post
Hello! I'd love to join, if that's okay! We are on Baby Step 2 - we took a couple of trips this month that we are paying for, and some grass fed beef, but next month we are focusing all of our energy on that darn student loan! We owe $15000 on it, hoping to have it paid by the beginning of next summer.

I am trying to think of every way to save even more money and put it toward student loan. I'm hoping to do this by dining in instead of dining out, more careful menu planning - so we're not throwing food away!, and using coupons. Just yesterday I scored four large packages of wipe for $6 at Rite Aid, and found free range chicken breasts for $1.19/lb (so cheap in our area).

What are some radical ideas that you guys have implemented to save moolah! I want this thing gone NOW!

It sounds like you are off to a great start! I know just how you feel, too. I have an $8K student loan that is just driving me CRAZY. I want to sell some furniture and extra stuff we don't need (even books!) and just throw all that money at the loan. Once it's paid off I can start working on a bigger EF and that will make me feel so much more safe and secure.... right now I feel like we're always on the edge, and it's really frustrating.
 
#23 ·
I'm so excited that after this divorce is final I'll actually be able to start a savings. Our trial is set for October. Although I am dreading the day of trial, I am very much looking forward to being in charge of my own money, what little there will be. If I save $$ now, anything I save will be split in half with my stbx. I'm tired of being a "Current" and barely keeping my head above water and am looking forward to being able to invest wisely and make some $$$
 
#24 ·
Hello again!

We're finally back online after our big move. Finances are officially ROUGH!! We have barely 1 months rent left of our savings and emergency fund I'm without a job (I have one more paycheck coming), and our tenant's rent cheque bounced (yay!!
).

There's a big grey cloud passing over and I hope it moves out of its way quickly! I've been around handing out resumes to any Joe-Schmo job just to get going on SOMETHING. The sitting here and waiting is starting to drive us all nuts (we'll be singing a different tune in a month, I'm sure).

Anyways. Finances are fun when you're getting places with them, not so fun when they're nearly non-existant.

Hoping September treats us better.
 
#25 ·
Quote:

Originally Posted by eirual View Post
Hello again!

Anyways. Finances are fun when you're getting places with them, not so fun when they're nearly non-existant.

Hoping September treats us better.

Agreed!
Here's to a much smoother September!
 
#26 ·
Welcome back eirual - I'm glad that the move is over and you can start on the new chapter in your life. I agree finances are fun when you see forward progressive but that's about it. Best wishes on your job search!

Akichan - Yay on seeing the end of the divorce in sight. I'm sure that it will feel good to go from survival mode to savings mode.

Welcome imamomx2 - Menu planning has been a big help for me. I know what days we have to have a meal pre-prepared or a quick meal ready due to after school activities, etc.
 
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